Many exchanges throughout the world use electronic trading processes to trade stocks, bonds, futures, options and other products. These electronic exchanges typically have three components: mainframe computers (host), communications servers, and the exchange participants' computers (client). The host's operations cover order-matching, maintaining order books and positions, price information, and managing and updating the database for the online trading day as well as nightly data runs. The host is also equipped with external interfaces that ideally maintain uninterrupted online contact to quote vendors and other price information systems.
Traders can link to the host through, among other things, high speed data lines, high speed communications servers and the Internet, for direct connections between the client and the host. Data is transmitted in both directions between traders and exchanges via high speed communication channels.
Irrespective of the way in which a connection is established, the exchange participants' computers allow traders to participate in the market. The traders use software that creates specialized interactive trading screens on the traders' workstations or desktops. The trading screens enable traders to enter and execute orders, obtain market quotes, and monitor positions. The range and quality of features available to traders on their screens varies according to the specific software application being used.
The present exchanges, such as the stock, bond, futures and options exchanges, have volatile products with prices that move rapidly. To profit in these markets, traders must be able to react quickly and even a slight speed advantage obtained from user friendly, rapidly efficient software, fast communications capabilities, and other factors, can generate significant financial returns in a fast moving market. A trader lacking a technologically advanced interface to trade in such markets is at a severe competitive disadvantage in the present trading environment.
Irrespective of what interface a trader uses to enter orders in the market, each market supplies and requires the same information to and from every trader. The bids (an offer to buy) and asks (an offer to sell) in the market make up the market data and those trading in that market receive this information if it is provided by the respective exchange. Similarly, exchanges require that certain information be included in each order. For example, traders must supply information such as the name of the vehicle being traded, quantity, restrictions, price and multiple other variables. Without all of this information, the market will not accept the order. This input and output of information is the same for every trader for a specific vehicle being traded.
With these variables being constant, a competitive speed advantage must come from other aspects of the trading cycle, such as the type and functionality of the interface, or trading tool, used by the trader to buy or sell the financial instrument, or vehicle, of interest.
In existing systems, multiple elements of an order must be entered prior to an order being sent to market, which can be time consuming for the trader. Such elements include the commodity symbol, the desired price, the quantity and whether a buy or a sell order is desired. The more time it takes a trader to enter an order, the more likely the price on which he wanted to bid or ask will change or not be available in the market because the market is fluid and many traders typically send orders to the market simultaneously. Indeed, a successful market strives to have such a high volume of trading that any trader who wishes to enter an order will find a match and have the order filled quickly, if not immediately. In such liquid markets, the prices of the vehicles can fluctuate rapidly. On a trading screen, this results in rapid changes in the price and quantity fields within the grid defining the active trading data for that vehicle. If a trader intends to enter an order at a particular price, but misses the price because the market prices moved before the order could be entered, the trader may lose hundreds or thousands of dollars on that trade. The faster a trader can trade, the less likely it will be that he or she will miss the desired buy/sell price.
Present trading systems contain numerous ways of displaying the depth of a market for a particular trading vehicle. These systems either anchor inside market prices to a central axis, or move market depth along a static display of ordered prices. Users of the former type of system run the risk that an instantaneous change in price that occurs simultaneously with a command to submit or withdraw an order may result in an unwanted execution of the order (either a buy or sell) at an undesired price. In the latter type of system, the inside market prices can easily drift off the user's screen when the range of prices on screen no longer corresponds to any prices in the inside market, thereby requiring the user to execute a recentering command. Accordingly, there is a need for an improved market depth trading tool that addresses the disadvantages of existing systems. Other needs will become apparent upon reading the following description, taken in conjunction with the drawings.